Bitcoin’s price started a strong upward trend at the beginning of the year and it kept making new short-term highs. But during the past few weeks, the situation became quite confusing for most investors because Bitcoin was continuously moving in small sideways channels. Last week’s sharp decline has made the situation clear for most traders.
But some traders think that it’s a manipulative move designed to trap the investors. The following Bitcoin weekly news may shed some light on whether Bitocin is going to continue its downward momentum or not.
Key Takeaways: –
- Last week’s significant price drop was triggered by factors including decreased market activity, reports of SpaceX selling Bitcoin, and concerns about China’s property crisis.
- A mysterious Bitcoin wallet accumulating $3 billion worth of Bitcoin raises speculation about its connection to the potential approval of BlackRock’s Bitcoin ETF.
- The market may be adjusting to the delayed arrival of BlackRock’s Bitcoin ETF, impacting Bitcoin’s behavior.
- Bitcoin derivatives metrics, such as open interest rate and funding rate, suggest market volatility and potential shifts in sentiment.
Why Bitcoin’s Price Dropped Last Week?
Last week’s price decline was triggered by a number of factors. The shrinking market activity, reports of SpaceX selling its Bitcoin holdings, and concerns about China’s property crisis are the leading aspects that led to this move. The investors may experience more wild swings due to the shrinking volume.
Glassnode and Coinshares have claimed that exhaustion and low interest are contributing factors that triggered the negative move. Also, the market is highly influenced by celebrities like Elon Musk. So, some investors might have sold their holdings following the news of SpaceX selling some of its Bitcoin holdings.
Usually, Bitcoin is considered a hedge against inflation. But sometimes, it also shows the effects of economic turmoil. Some analysts think that the market is probably adjusting to the delayed arrival of BlackRock’s Bitcoin ETF.
A Mysterious Bitcoin Wallet
A mysterious Bitcoin wallet has recently grabbed the attention of the entire crypto market as it has received more than $3 billion worth of Bitcoin within three and a half months. Thus, it has become the third-largest Bitcoin holder globally with a total of 118,000 BTC tokens. There are certain theories being discussed in the market.
Most people believe that the accumulation is most probably associated with BlackRock’s announcement of a Bitcoin ETF. However, there isn’t any solid evidence for such claims. But it can be a strong factor behind this accumulation because the investors are excited about Bitcoin’s price reaching a new all-time high if the BlackRock Bitcoin ETF is approved.
Bitcoin Derivatives Metrics Analytics
An open interest rate is a key factor that helps with determining the upcoming price movement of Bitcoin. It shows the total number of Bitcoin positions on derivative platforms. The market may experience intense market volatility when the open interest rate increases. Similarly, the investors may observe stabilization in the price if the open interest rate is decreasing.
The derivatives market showed an increase in interest rates before the recent crash. But most positions got liquidated during the crash due to which the interest rate plummeted sharply. It may be an indication that investors are building up long positions in the market.
The funding rate is another important factor to look for. Currently, the funding rate is showing a negative momentum which means that the market is shifting in favor of short sellers. The diversion between the funding rate and the open interest rate indicates that the market may again experience another volatile movement.
Negative News for South Korean Crypto Holders
The crypto holdings of around 8,520 tax evaders have become under threat as the local authorities of Cheoungju (a South Korean city) have asked the crypto exchanges to provide the details of their crypto holdings. The city has decided to confiscate the crypto holdings of the local residents who owe more than $750 in local taxes.
The authorities will start the process of seizing the cryptocurrencies of these individuals once the investigation is complete. The authorities are using this strategy to prevent the local residents from concealing their assets in the form of cryptocurrencies. It’s not the first time, the city has decided to take such a bold step.
The city’s tax collection department collected around $51,000 worth of Korean won from 17 individuals in 2022 by revealing their crypto holdings. Other countries like the United States and Argentina are also confiscating cryptocurrencies for certain reasons.
Financial Difficulties of the U.S-Based Investors
More than 61% of US citizens are refraining from investing in high-risk assets like Bitcoin due to financial constraints. A huge population of the United States is struggling financially. So, even though the price of Bitcoin has declined sharply, the demand might not increase due to financial difficulties.
The reports show that the crypto market is now widely influenced by institutional investors while it was previously influenced by retail investors. Retail investors are reluctant to invest in these assets due to financial uncertainties. The stats show that retail investors will avoid getting into the market in large numbers for the time being.
Bitcoin Weekly Technical Analysis
Bitcoin finally broke below the consolidation zone last week and the price declined sharply. The price is now trading in a small zone and it may recover a little bit over the next few days. However, it will eventually go to test its support level around $24,800-$25,000. The last week’s sharp decline indicates that the price may break below the support level marked on the chart.
The market needs a set of positive news to break the bearish sentiment of the investors otherwise, its decline will most probably continue over the next few weeks.
In a tumultuous landscape, Bitcoin’s recent trajectory shifted from a promising surge to sideways trading, culminating in a sharp price drop. Factors such as dwindling market activity, SpaceX’s Bitcoin sale reports, and China’s property crisis played pivotal roles. Bullish momentum fatigue and low interest amplified the downturn, accentuating Bitcoin’s sensitivity to external influencers like Elon Musk.